The chairman of the Commodities Futures Trading Commission (CFTC) has claimed that most cryptocurrencies are commodities and has admitted that a ‘turf war’ is going on with the SEC over who gets to regulate crypto.
CFTC Chair: Most Cryptos are Commodities
In a recent appearance on CNBC's "Squawk Box," CFTC Chair Rostin Behnam asserted that, according to existing laws, a substantial number of cryptocurrencies are classified as commodities.
While providing some regulatory clarity, this statement also sheds light on an ongoing "turf war" between regulatory bodies vying for control over the crypto space.
Behnam claimed that most tokens can be constituted as commodities under existing laws, acknowledging the need to reconcile decades-old regulations with the evolving landscape of cryptocurrency.
CFTC's Jurisdictional Hook
The CFTC has historically classified all crypto, including Ethereum and others, as commodities. Notably, this classification was evident in the CFTC's lawsuit against FTX founder Sam Bankman-Fried in December 2021, explicitly referring to Bitcoin, Ether, and Tether as commodities.
During a Senate Agriculture Committee hearing in March, Behnam reinforced the CFTC's jurisdiction over various digital assets, including Ethereum and stablecoins, citing their listing on CFTC exchanges for an extended period. This, according to Behnam, establishes a direct jurisdictional hook for the agency to oversee both the derivatives and underlying markets of Ethereum.
Diverging Views: CFTC vs. SEC
Behnam's perspective sharply contrasts with that of SEC Chair Gary Gensler, who asserts that with the exception of Bitcoin, all other cryptocurrencies should be treated as securities under the SEC's regulatory umbrella. Gensler emphasized this stance in February, stating that despite attempts to launch tokens overseas initially, the core nature of these tokens as securities remains unchanged.
Gensler had addressed the matter in February when he said,
"They might drop their tokens overseas at first and contend or pretend that it's going to take six months before they come back to the U.S. But at the core, these tokens are securities because there's a group in the middle, and the public is anticipating profits based on that group.’’
Collaboration Amid Differences
Acknowledging the difference in opinion, Behnam highlighted a positive working relationship with the SEC, emphasizing shared interests in protecting U.S. markets, the financial ecosystem, and consumers. This collaborative approach aims to navigate the complexities of the crypto landscape while ensuring regulatory frameworks uphold market integrity.
Regulatory Turf War and Global Implications
The acknowledged "turf war" between the CFTC and the SEC highlights the pressing need for clear and consistent regulations in the cryptocurrency industry. This clarity is paramount not only for investor protection but also for fostering broader adoption of cryptocurrencies. Due to the U.S.’s pivotal position in the global crypto market, the resolution of this regulatory discord is critical for providing a stable and predictable environment for market participants in the evolving crypto landscape.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
